Saudi Arabia set for series of privatizations

Saudi Arabia set for series of privatizations
Economy Minister Mohammed Al-Tuwaijri with Kirill Dmitriev, Bassem Awadallah and Darren Davis at Thursday’s panel discussion moderated by Frank Kane. (AN photo by Ziyad Alarfaj)
Updated 26 October 2018

Saudi Arabia set for series of privatizations

Saudi Arabia set for series of privatizations
  • Minister addresses FII panel moderated by Arab News columnist
  • Saudi Arabia plans to sell a stake in oil firm Saudi Aramco, which could raise around $100 billion, plus a number of other privatizations worth as much as $200 billion

RIYADH: Saudi Arabia plans a raft of privatizations across four key sectors by early next year, a panel at the Future Investment Initiative (FII) forum heard on Thursday.

Economy Minister Mohammed Al-Tuwaijri said the state sell-off would span four sectors: Silos and grains, schools, health care and desalination.

The minister was speaking on the final day of the Riyadh conference, in a panel session about the economic models for privatization. 

Saudi Arabia plans to sell a stake in oil firm Saudi Aramco, which could raise around $100 billion, plus a number of other privatizations worth as much as $200 billion.

“Some sectors … are more ready than others,” Al-Tuwaijri told the FII discussion, which was moderated by Arab News business columnist Frank Kane. 

Watch the video of the session:

“Between now and first quarter of 2019, we are going to introduce … opportunities in silos and grains … We’re also going to introduce some assets for education (and) a couple of assets in health care … and also some desalination plants.”

He added that there are several challenges to the pace of the privatization drive, including labor market policies and ”massive HR challenges.”

Saudi oil giant Aramco is “absolutely ready” for its long-awaited IPO but several regulatory procedures remain, he added.

Darren Davis, the acting CEO of Saudi Arabia’s largest mining company Ma’aden, said that privatizations can come in different forms. 

His own company, for example, is partly government-owned, and partly owned by private shareholders.

“The Ma’aden case is an interesting example of the fact that privatization doesn’t come in one size, you need to be flexible in how you apply privatization,” he said.

Fellow panelist Bassem Awadallah, CEO of consultancy Tomoh Advisory, agreed that there were different models to pursue when it comes to selling off state assets. 

“It is very healthy to have different models of privatization because countries need to develop their tailor-made solutions based on individual countries and sectors,” he said. “There is no model that fits all.”

Awadallah pointed out that privatization programs had been partly tainted by perceptions of a lack of transparency and corruption in some other markets.

“I think it is very important to explain to people what privatization is all about … People need to understand that this is not just another transfer of capital from the public sector to the private sector,” he said. 

“The more open, and the more transparent the governments are in terms of addressing these issues, and in explaining to people why we need to privatize … is really something that needs to be addressed.”

Kirill Dmitriev, CEO of the Russian Direct Investment Fund, pointed to the sell-off of Russian assets. 

“We went through this painful privatization experience which we believe in the end was a success because now most of the successful private businesses emerged from those privatized entities,” he said.


Rising consumer appetite for digital payments in Saudi Arabia

Rising consumer appetite for digital payments in Saudi Arabia
Updated 12 May 2021

Rising consumer appetite for digital payments in Saudi Arabia

Rising consumer appetite for digital payments in Saudi Arabia
  • The survey found that 94 percent of respondents are comfortable with digital payment systems such as biometrics, digital wallets and QR codes

RIYADH: Statistics released this week have highlighted the massive surge in the uptake of digital payments in the Kingdom, especially in light of pandemic restrictions on shopping and travel.

According to monthly data issued by the Saudi Central Bank, there were 25.84 million online sales transactions through the Mada system in March. The total value of sales during the month was SR 5.31 billion ($1.4 billion), a year-on-year increase of 196 percent.

The Small and Medium Enterprises General Authority (Monshaat) also reported that the e-commerce sector received an investment of around SR 250 million during the first quarter of 2021, according to an article by the Al-Eqtisadiah newspaper.

With shoppers having few alternatives when it comes to getting basic necessities, it is no surprise that the first-ever Mastercard New Payments Index for the Kingdom found widespread acceptance of digital payments among Saudi consumers.

The survey found that 94 percent of respondents are comfortable with digital payment systems such as biometrics, digital wallets and QR codes.

A year into the pandemic, research from Mastercard showed that the adoption of new payment technologies is rising and consumer appetite for it growing fast.

According to the index, 68 percent of respondents tried a new payment method they would not have tried under normal circumstances.

In addition, 92 percent of Saudi consumers said they have access to more ways to pay compared to this time last year.

Three-quarters of respondents said digital payment methods help them save money, while the same amount also said they are more loyal to retailers who offer multiple payment options. Sixty-nine percent of Saudi consumers said using biometrics to verify purchases made them feel safer.

“More than ever, consumers in Saudi Arabia are adapting and embracing payment innovations. Businesses, both big and small, must respond to this evolving trend. We are closely working with our partners and retailers to deliver secure and diverse payment technologies for the omnichannel generation,” J.K Khalil, country manager, Saudi Arabia, Bahrain and the Levant at Mastercard, said in a press statement.


Latest reforms will boost KSA real estate, says analyst

Latest reforms will boost KSA real estate, says analyst
Updated 12 May 2021

Latest reforms will boost KSA real estate, says analyst

Latest reforms will boost KSA real estate, says analyst
  • The support for the housing sector will help the government achieve one of its core Vision 2030 goals to reach 70 percent homeownership by the end of the decade

RIYADH: The Saudi government’s recent announcements in the real estate sector, including providing more than 53,000 new homes in Riyadh and relaxing the ban on ownership by non-Saudis in Makkah and Madinah, will help to overhaul the sector and reach the Kingdom’s Vision 2030 home ownerships goals, according to an industry figure.

“The announcement of the allocation of 20 million square meters of land in the northern Riyadh suburb of Al-Jawan, effectively trebling the size of this neighborhood, to housing developments will certainly aid the government’s home ownership targets,” Faisal Durrani, head of Middle East research at real estate consultancy firm Knight Frank, told Arab News.

He added that the announcement by Crown Prince Mohammed bin Salman “follows the December announcement by Roshn to develop 30,000 residential units in Riyadh — 4,000 in the first phase — as part of a national program to deliver 1 million new homes by 2030.”

The move is also in line with the city’s aim to become one of the 10 largest economic cities in the world and to increase its population from 15 to 20 million by 2030.

The support for the housing sector will also help the government achieve one of its core Vision 2030 goals to reach 70 percent homeownership by the end of the decade, up from 47 percent four years ago and around 60 percent at present.

The decision late last week to allow companies listed on the Saudi Stock Exchange to own properties in Makkah and Madinah was also seen as a major move by the government to encourage foreign investment and to permit non-Saudi investor ownership in the prime markets.

“Opening ownership in Makkah and Madinah to international companies is a clear indication of the direction of travel of the Saudi economy and is perfectly aligned with Vision 2030,” Durrani said, adding: “The landmark change is likely to pave the way for a boost in demand for commercial real estate over the medium to long-term, as businesses are drawn to the emerging economic opportunities.”

Such moves by the government are likely to be a catalyst for a post-pandemic rebound in the Kingdom’s real estate sector, which are already up 25 percent year-on-year (Y-o-Y) in Riyadh during the first quarter of this year, and 34 percent Y-o-Y in Jeddah and 11 percent Y-o-Y in the Dammam Metropolitan Area.


Airbus tells suppliers to plan for 18% output hike in 2022

Airbus tells suppliers to plan for 18% output hike in 2022
Updated 12 May 2021

Airbus tells suppliers to plan for 18% output hike in 2022

Airbus tells suppliers to plan for 18% output hike in 2022
  • The tentative new goal would lift output of the workhorse domestic and medium-haul jet

PARIS: Europe’s Airbus is asking suppliers to get ready for a further 18 percent increase in A320-family jet output during 2022, on top of existing targets for this year, as airlines ready for a partial return to normal travel, industry sources said.

The tentative new goal would lift output of the workhorse domestic and medium-haul jet, which competes with Boeing’s partially grounded 737 MAX, to 53 a month, they told Reuters.

The number being floated for end-2022 remains informal and Airbus has only committed so far to raising output in two steps to 45 a month by end-2021 from 40 now.

But it is the first concrete indication of the shape of recovery Airbus hopes to achieve for its main single-aisle jets next year as it restores coffers depleted by the pandemic.

“We do not comment on speculation regarding the longer-term trajectory,” a company spokesman said.

“We see the market recovering to pre-COVID levels in the 2023-2025 time frame, with single-aisle recovering first,” he said, adding, “uncertainties remain.”

Airbus, which had been enjoying record jet demand before the virus triggered widespread travel bans, cut output of its best-selling model by a third to 40 a month around a year ago.

In January, it announced plans to increase output to 43 a month in the third quarter and 45 a month in the fourth.

CEO Guillaume Faury said last month Airbus aimed for a “steep ramp-up” in 2022 and 2023, without elaborating.

Some suppliers have warned of bumps ahead in restoring pre-pandemic production as smaller parts makers struggle with cash shortages. Airbus must also address industrial snags that held up dozens of deliveries even before COVID-19, they say.

Output of larger wide-bodied jets remains depressed by travel restrictions and is not expected to recover soon.


Lebanese drivers queue for hours as fuel crisis worsens

Lebanese drivers queue for hours as fuel crisis worsens
Updated 11 May 2021

Lebanese drivers queue for hours as fuel crisis worsens

Lebanese drivers queue for hours as fuel crisis worsens
  • Some stations rationed the amount of fuel sold to customers, mostly taxi drivers

BEIRUT: Motorists queued for hours at gas stations across Lebanon on Tuesday as fears of an imminent end to the country’s subsidy on fuel increased demand for a commodity already in short supply.

Payment delays are also keeping urgent oil stocks on offshore tankers, meaning that many gas stations are facing critical supply shortages.

Queues extended into streets as drivers waited to fill their cars. Some stations rationed the amount of fuel sold to customers, mostly taxi drivers. Other stores closed down entirely.

However, Fadi Abu Shakra, representative of the union for fuel distributors and gas stations in Lebanon, said that the confusion and fear surrounding gas supply was “unjustified.”

He denied news reports that oil companies have notified distributors of an end to fuel subsidies.

Georges Brax, a member of the gas station owners’ syndicate, said: “The fact is, some stations have been running on very low fuel stocks due to the rationing of credits, which has forced some of them to close.”

He added that more stations will open their doors as soon as importing companies begin distribution, warning that the problem is not with importing companies or station owners, but with the Central Bank of Lebanon.

“It is necessary to speed up the opening of credits for ships that have reached regional waters, which have prior approval so that they can unload their cargo, thus easing market tension,” he said.

Brax added: “We have to get used to this reality, because for weeks we have been facing the same problem and the fuel has not been cut off.”

However, he added that, given the complexity of the issue, “in the short term, subsidies will not be lifted.”

But the panic of the Lebanese seems justified as subsidies on food and over-the-counter medicines are being gradually lifted.

Caretaker Finance Minister Ghazi Wazni has warned that Lebanon will “run out of money” to afford basic imports by the end of May if its remaining foreign currency reserves are not rationed.

According to Wazni, delays in launching the plan are costing the government about $500 million per month.

Bechara Asmar, head of the General Confederation of Lebanese Workers, said that there is “chaos in the markets and in all sectors,” and that “citizens are standing in queues in front of bakeries, fuel stations, supermarkets, shops and pharmacies to secure their daily needs.”

He added: “There is no plan yet to protect low-income people who can no longer afford their basic needs. Who is responsible? Is the Bank of Lebanon solely responsible? Or is it collusion between some merchants, importers, mafias, money whales and officials?”

Some of Lebanon’s fuel supply is also being smuggled to Syria.

An investigation by North Lebanon First Investigative Judge Samaranda Nassar revealed that “smuggling of fuel from the north into Syria in large commercial quantities through several smuggling lines has been going on for about two weeks.

“The new line passes through the town of Baino toward old Akkar, Al-Qamou’a, Hermel and then into Syria,” a report said.

Nassar issued 15 arrest warrants in absentia in six cases relating to fuel smuggling.

A gas station in the border area of Al-Arida was also closed after it was established that the owners “had filled tanks with fuel to be smuggled into Syria.”


Lebanon must fix debts, end prosecutor action or face power cut, says Turkish firm

Lebanon must fix debts, end prosecutor action or face power cut, says Turkish firm
Updated 11 May 2021

Lebanon must fix debts, end prosecutor action or face power cut, says Turkish firm

Lebanon must fix debts, end prosecutor action or face power cut, says Turkish firm
  • Turkey’s Karadeniz supplies electricity to Lebanon from power barges

ISTANBUL: Turkey’s Karadeniz, which supplies electricity to Lebanon from power barges, told Beirut to halt action by the Lebanese prosecutor to seize its vessels and said it must draw up a plan to settle arrears to avoid a cut in supplies, a spokesperson said.
The spokesperson for Karpowership, a unit of Karadeniz that operates floating power plants, was speaking on Tuesday after Lebanon’s Finance Ministry cited a lawmaker saying the country had been threatened with a cut to its supplies.
A Lebanese prosecutor issued a decision last week to seize the barges and fine the firm after TV channel Al-Jadeed reported corruption allegations tied to the power contract. The firm denies the charges and says it has not been paid for 18 months.